1. Atty. Floresinda B. Digal
The Restructured Power Sector and The Road Towards Clean Energy
Atty. Floresinda B. Digal
Director, Regulatory Operations Service
Energy Regulatory Commission (ERC)
Asia Pacific Energy Regulatory (APER) Forum 2016
29 September 2016
EC Rate -Setting Methodologies

2. Discussion Points Energy Profile Renewable Energy Act of 2008
Incentives for RE Under RE Law
Update on Policies
APER Forum 2016

3. Latest data from the Department of Energy shows a significant shift and increased demand for coal and natural gas over the years.
The Malampaya gas field began production in 2001 and enabled the supply of at least 2,700 megawatts of power for a period of at least 20 years starting 2002.[8] The gas is conveyed through a 500 km pipeline from the field to Batangas City where it is fed into the generation system.
APER Forum 2016

4. APER Forum 2016

5. APER Forum 2016

6. Million tonnes of Oil Equivalent
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7. RENEWABLE ENERGY ACT OF 2008
Republic Act No. 9513
RENEWABLE ENERGY ACT OF 2008
An Act Promoting the Development, Utilization, and Commercialization of Renewable Energy Resources and
For Other Purposes
APER Forum 2016

8. Renewable Energy Act of 2008
Bangui Wind Farm
Ilocos Norte, Philippines
Accelerate the exploration and development of the country’s renewable energy resources by providing fiscal and non-fiscal incentives to private sector investors and equipment manufacturers / suppliers.
Republic Act (R.A.) No or the Renewable Energy Act of 2008 was enacted to accelerate the exploration and development of the country’s renewable energy resources and promote its efficient and cost effective commercial application by providing fiscal and non-fiscal incentives to private sector investors and equipment manufacturers /suppliers.
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9. RE Law Salient Features
Renewable Portfolio Standards
Feed-In Tariff System
Renewable Energy Market
Green Energy Option
Net Metering for Renewable Energy
Transmission and Distribution System Development
*DOE to lead, other agencies assist
The FITs to be approved by the ERC shall be technology-specific, and may further be differentiated by the size of the plant.
It shall have a duration of 20 years, meaning that the Renewable Energy Developers shall enjoy the prevailing Feed-in Tariff applicable to them from the time they start commercially operating and for 20 years thereafter.
It is also subject to annual adjustment to account for local inflation and foreign currency exchange fluctuations. A simple benchmarking indexation formula is provided in the Rules to apply to all technologies.
In addition to that, the FITs to be set are to be subjected also to a degression rate to be determined by the ERC to encourage the developers to invest at the initial stage and hasten deployment of renewable energy. Subjecting the FITs to degression also avoids substantial windfall from being enjoyed by developers especially in the technologies where significant cost reductions are expected in the future as these technologies mature.
And lastly, the Feed-in Tariffs are subject to review and readjustment by the ERC in the following cases:
When the installation targets are already achieved within the targeted period;
When the installation targets are not achieved within the targeted period;
When there are significant changes to the costs or when more accurate cost data become available; and
Other analogous circumstances that justify the review and re-adjustment.
However, the readjusted tariffs that may be set by the ERC following this review shall apply only to new Renewable Energy Developers.
APER Forum 2016

10. RE Law Feed-in Tariff Net-Metering Program NON-FISCAL INCENTIVES
On-Grid
Renewable Portfolio Standards
Feed-in Tariff
Renewable Energy
Market
Green Energy Option
Net-Metering Program
Off-Grid
Min. RE Generation
Cash Incentives
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11. RE Law FISCAL INCENTIVES Income tax holiday Duty-free importation
Special Realty Tax Rates
Net Operating Loss Carryover
Corporate Tax Rate after ITH
Accelerated Depreciation
Zero VAT
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12. Feed-In Tariff System (Sec. 7, R.A. 9513)
For emerging renewable energy resources to be used in compliance with the renewable portfolio standard
Priority connection to the grid
Priority purchase and transmission of, and payment for, such electricity by the grid system operators
Fixed tariff by technology
Mandated number of years, not less than twelve (12)
The ERC, in consultation with the National Renewable Energy Board (NREB) developed the Feed-in Tariff System.
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13. Feed-in Tariff System Resolution # 16 (July 12, 2010)
Resolution # 15, (November 19, 2012)
A fixed rate per kilowatt-hour for emerging renewable energy sources, excluding any generation for own use, as approved by the ERC.
APER Forum 2016

14. Feed-in Tariff System Based on cost of a representative project
Technology-specific
20 years duration
Subject to degression and adjustments
Subject to review
SALIENT FEATURES
Now let us proceed to the discussion on how the FITs will be set, as provided in the FIT Rules.
The FITs to be approved by the ERC shall be technology-specific, and may further be differentiated by the size of the plant.
It shall have a duration of 20 years, meaning that the Renewable Energy Developers shall enjoy the prevailing Feed-in Tariff applicable to them from the time they start commercially operating and for 20 years thereafter.
It is also subject to annual adjustment to account for local inflation and foreign currency exchange fluctuations. A simple benchmarking indexation formula is provided in the Rules to apply to all technologies.
In addition to that, the FITs to be set are to be subjected also to a degression rate to be determined by the ERC to encourage the developers to invest at the initial stage and hasten deployment of renewable energy. Subjecting the FITs to degression also avoids substantial windfall from being enjoyed by developers especially in the technologies where significant cost reductions are expected in the future as these technologies mature.
And lastly, the Feed-in Tariffs are subject to review and readjustment by the ERC in the following cases:
When the installation targets are already achieved within the targeted period;
When the installation targets are not achieved within the targeted period;
When there are significant changes to the costs or when more accurate cost data become available; and
Other analogous circumstances that justify the review and re-adjustment.
However, the readjusted tariffs that may be set by the ERC following this review shall apply only to new Renewable Energy Developers.
APER Forum 2016

15. Overall FIT Framework TransCo FIT-ALL END-USERS APER Forum 2016
This is the overall FIT Framework. Whenever there is renewable energy injected into the system, NGCP or the utilities, in the case of the embedded plants, allocate the energy among all their customers or electricity end-users. In turn, all electricity end-users are obligated to pay a uniform Peso/kWh charge referred to as Feed-in Tariff Allowance or FIT-All. The FIT-All is collected by the utilities or by NGCP itself in the case of end-users that are directly connected to the transmission system and remitted to TransCo. TransCo acts as the administrator of the FIT-All proceeds and takes care of the settlement with the Renewable Energy Developers based on the quantity they delivered into the system and the applicable Feed-in Tariff.
TransCo
FIT-ALL
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16. Process in Setting the FIT
ERC may, initiate the proceedings in the review of the FITs.
NREB
Now let us proceed to the discussion on how the FITs will be set, as provided in the FIT Rules.
The FITs to be approved by the ERC shall be technology-specific, and may further be differentiated by the size of the plant.
It shall have a duration of 20 years, meaning that the Renewable Energy Developers shall enjoy the prevailing Feed-in Tariff applicable to them from the time they start commercially operating and for 20 years thereafter.
It is also subject to annual adjustment to account for local inflation and foreign currency exchange fluctuations. A simple benchmarking indexation formula is provided in the Rules to apply to all technologies.
In addition to that, the FITs to be set are to be subjected also to a degression rate to be determined by the ERC to encourage the developers to invest at the initial stage and hasten deployment of renewable energy. Subjecting the FITs to degression also avoids substantial windfall from being enjoyed by developers especially in the technologies where significant cost reductions are expected in the future as these technologies mature.
And lastly, the Feed-in Tariffs are subject to review and readjustment by the ERC in the following cases:
When the installation targets are already achieved within the targeted period;
When the installation targets are not achieved within the targeted period;
When there are significant changes to the costs or when more accurate cost data become available; and
Other analogous circumstances that justify the review and re-adjustment.
However, the readjusted tariffs that may be set by the ERC following this review shall apply only to new Renewable Energy Developers.
APER Forum 2016

17. Approved FIT Rates FIT 1 ERC Case No. 2011-006 RM July 2012 NREB-
Proposed
(in PhP/kWh)
ERC-Approved
Run-of-River Hydro
6.15
5.90
Solar
17.95
9.68
Wind
10.37
8.53
Biomass
7.00
6.63
Effectivity
“Payment of the approved FIT rates to the eligible RE Developers shall commence upon the effectivity of the Feed-in Tariff Allowance (FIT-All), which shall be determined by the Commission at a later date after due proceedings thereon.”
Note: Decision on OTEC FIT deferred
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18. ERC-Approved Degression Rates
Approved FIT Rates
ERC-Approved Degression Rates
(in PhP/kWh)
ROR Hydro
0.5%
after year 2 from effectivity of FIT
Solar 6%
after year 1 from effectivity of FIT
Wind
Biomass
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19. Approved FIT Rates SOLAR FIT 2 WIND FIT 2
Resolution No. 6, Series of 2015 (March 27, 2015)
PhP8.69 per kWh
Effective May 6, 2015 up to March 15, 2016
WIND FIT 2
Resolution No. 14, Series of 2015 (October 6, 2015)
PhP7.40/kWh
Limited to three (3) wind projects only:
Trans-Asia’s San Lorenzo Project – 54MW
Petro Wind’s Nabas Project – 36MW
Alternergy’s Pililia Project – 54MW
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20. Feed-In Tariff Allowance (FIT-All)
How can we pay the RE Developers?
Section 2.5: FIT Rules
Feed-In Tariff Allowance (FIT-All)
FIT-ALL
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21. FIT-All Payment & Collection Guidelines
FIT-All Guidelines
ERC Resolution No. 24, S. of 2013
(December 16, 2013)
Resolution Adopting the Guidelines on the Collection of the FIT-All and the Disbursement of the FIT-All Fund.
FIT-All Payment & Collection Guidelines
FIT RULES `
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22. What is FIT-All? Collecting Agents: DUs NGCP RES Uniform ₱/kwh charge
Payable by all electricity users
Proceeds go to FIT-All Fund, administered by Transco, from where the RE payments will be sourced
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23. Net-Metering Rules Resolution # 9 On-grid systems.
Installations of <100kW
For eligible RE Technologies
End-user should be in good credit standing
The RE System must be compliant with the standards
Resolution # 9
23 May 2013
APER Forum 2016

24. Interconnection Set-Up
Bi-Directional Meter
REC Meter
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25. Issues/Challenges *entitlement to lifeline DU
Resistance - violation of franchise
Additional responsibility
Revenue loss
Qualified End User
Investment cost recovery
Limitations on size/rate recovery
*entitlement to lifeline
EC Rate -Setting Methodologies

26. Prospects for Clean Energy
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27. Initiatives Towards Clean Energy
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28. EC Rate -Setting Methodologies

29. The National Renewable Energy Program (NREP) outlines the policy framework enshrined in Republic Act 9513 or the RE Law. It sets the strategic building blocks that will help the country achieve the goals set forth in the Renewable Energy Act of The NREP signals the country's big leap from fragmented and halting RE initiatives into a focused and sustained drive towards energy security and improved access to clean energy.
million barrels of fuel oil equivalent (MMBFOE)
APER Forum 2016

30. National Renewable Energy Program
The government launched the National Renewable Energy Program (NREP) to steer the country in achieving the goals of higher utilization of renewable energy. The NREP sets target for each RE and looks at tripling the total RE capacity until 2030 to reach 15,236 MW by the end of the timeframe.
APER Forum 2016

31. Balanced Energy Mix
Fuel mix goal is aimed at reducing the country’s dependence on coal
Under the previous administration former President Benigno Aquino 3rd, the government was targeting a fuel mix of 30 percent from coal, 30 percent from RE, 30 percent from natural gas, and the remaining 10 percent from oil-based power plants.
The fuel mix goal was aimed at reducing the country’s coal dependence.
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32. Update on Policy Energy Mix policy being reviewed
30:30:30:10 (Coal:RE:Natgas:Oil)
Energy Mix should be in line with econ needs
Phil. signed the 2015 Paris Agreement
Phil. Has low carbon emissions
Our level of economic development at this point does not allow us to rely completely on RE
EC Rate -Setting Methodologies

33. Study to revive the Bataan Nuclear Power Plant
The feasibility of using nuclear power in the Philippines is currently being looked into. Energy policy makers are revisiting the nuclear power option as growth accelerates and the government is determined to power up poorer communities. The Department of Energy has cited the imperative need to secure additional supplies of electricity. Data shows that the demand for electricity could jump to as high as 126-terawatthours by 2030, from 82 terawatthours in a growth of 5-percent per year.
APER Forum 2016

34. Thank you!
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